February 27, 2018 / 7:33 AM / in 7 months

UK's Greggs to extend shop-opening target beyond 2,000

LONDON (Reuters) - British baker Greggs (GRG.L) will open a record number of new shops in 2018 and plans to extend its overall target beyond the 2,000 originally projected, it said on Tuesday.

A man walks past a Greggs bakery in Bradford, Britain March 1, 2016. REUTERS/Phil Noble

Greggs is transforming itself from a conventional bakery business into a broader takeaway food retailer, and its offer of sausage rolls, sandwiches, cakes and drinks has chimed with both consumers and investors. Its shares have risen 31 percent over the last year.

“We’ve pressed the accelerator on shop openings,” Chief Executive Roger Whiteside told Reuters after the company met forecasts with a 2 percent rise in 2017 profit.

Greggs, based in Newcastle in northern England, opened a net 90 new stores in 2017, taking its total to 1,854. It plans to open 110 to 130 in 2018.

“That will bring us very close to the 2,000 mark. At that point, we’ll declare another target,” Whiteside said. “Even that won’t be the end of the journey.”

Two key competitors, Costa Coffee (WTB.L) and Subway, already trade from over 2,000 British stores, he noted.

“We know that we can trade well near all of them, so if they can keep going we can,” he said.

Britain’s food-to-go market is forecast to grow 35 percent to 23.5 billion pounds ($32.8 billion) in the five years to 2022, according to researcher IGD.

Greggs made a pre-tax profit before one-off items of 81.8 million pounds for the year to Dec. 30 2017 - in line with analysts’ expectations and up from 80.3 million pounds in 2016.

Total sales rose 7.4 percent to 960 million pounds, while like-for-like sales in company-managed shops were up 3.7 percent.

As well as new stores Greggs benefited from improvements to its product range, with a focus on hot drinks, hot food and healthier options.

The stock was up 1.5 percent at 1,330 pence, valuing the business at 1.36 billion pounds.

Greggs said the UK consumer outlook remained challenging, but it was encouraged by the start it had made to the new year, with like-for-like sales up 3.2 percent in the eight weeks to Feb. 24.

UK consumers are being squeezed by inflation and are seeing wages fall in real terms.

“We’re a value brand, so if people are tight for money then Greggs is appealing in those circumstances, but it’s not as good as when people have money,” Whiteside said.

Editing by Larry King

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